News

Wednesday, February 25, 2009

Actuarial Study of Retiree Health Benefits and Their Impact on the Budget

Governmental Accounting Standards Board (GASB) statements 43 and 45 are governmental accounting standards that direct how state and local governments account for and report other post-employment benefits (OPEB) that are separate from pension benefits. The most common OPEB is retiree health benefits. The intent of the GASB 43 and 45 accounting requirement is to understand what past negotiated retiree benefit commitments mean to current and future budgets, and to accurately reflect the cost of those commitments in the years the costs are incurred (which are the years the employees actually worked for the districts). There is no obligation to pre-fund this liability, however, the districts do have a duty to disclose the liability on a biannual basis.

The districts had previously commissioned AON Consulting Group to perform an actuarial analysis of our post retirement benefit liability. The findings of that report were reported to the board on April 19, 2006. At that point in time, the districts’ liability was estimated to be $18,616,000 for the combined districts. Last night, the board received an updated actuarial study. That study indicated that the liability had decreased to $14,698,000 due to updated assumptions used in the study.